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Growth in Marathon’s Reserves Slows Down, Reserve Life Steadies

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Reserve growth

Marathon Oil Corporation (MRO), an independent crude oil and natural gas producer, witnessed moderate reserves growth over the past three years. According to the latest data available, its proved reserves increased 1.2% to 2,198 million barrels of oil equivalent (or MMBoe) in 2014, from 2,171 MMBoe in 2013. In 2013, reserves rose 8% from the previous year.

In comparison, Pioneer Natural Resources’ (PXD) reserves decreased 5.6% in 2014 over the previous year. Reserves for Cenovus Energy (CVE) increased 4% during the same period.

Marathon Oil is 1.3% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). It’s also 0.10% of the SPDR S&P 500 ETF Trust (SPY).

Approximately 53% of Marathon Oil’s 2014 reserves was crude oil, 13.6% was natural gas liquids (or NGLs), and 33.4% was natural gas.

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Reserves-to-production ratio

As we saw in the previous part of this series, Marathon Oil’s production has been volatile compared to its reserves growth. In 2014, total crude oil and natural gas production increased 2.5% over 2013. This was much better than the 14% decline it recorded in 2013 over 2012.

Marathon’s reserves-to-production ratio has stayed nearly unchanged at ~14.5x in the past two years. In other words, it would take Marathon Oil around 14.5 years to deplete all its proved reserves under its 2014 production rate, all other things remaining constant. Read the previous part of this series to know more about Marathon Oil’s production trend.

What led to changes in Marathon Oil’s reserves?

Marathon Oil has been adding to reserves primarily through extension of existing oilfields and discovery of new fields. It has also sold some assets, which reduced its reserves. In 1Q14, Marathon sold two oil blocks in Angola. In 4Q14, the company sold its Norway business. Marathon Oil lost 111 MMBOE reserves to asset sales in 2014 from a year earlier.

In the next part of this series, we’ll look at Continental Resources’ (CLR) production trend.

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